The decline in copper prices over the last year was mainly due to concerns over copper demand from China, due to the slowdown by consuming industries in the wake of weakening global trend mainly led to decline in nickel and copper prices.
The recent burst of China’s stock market bubble is also raising concerns on the demand of copper as China is the world’s largest consumer of copper, accounting for nearly 40% of the world’s demand for copper.
The commodity since the beginning of the year fell more than 9.5% and is in a bearish phase, trading well below the 10-week moving average. Last week copper initially fell but found enough support to turn around and close in the red near the open of the week on high volume. The Stochastic is showing a strong bullish momentum and is crossing above the 20 oversold line suggesting a buy signal.
Expecting an upward move to a weekly key level at 276.60 on a break above previous week high at 260.90 (scenario 1) or the commodity may stay in a consolidation pattern within the range from 260.90 down to 241.45.